Anyone Here A Full Time Investor?
Everyone says in the R/E business " Don't quit your dayjob." I was wondering if there are any investors here that have been successful enough to do R/E investing full time? If so, how many units, or if you are purely flipping...........Also I'd imagine that if you were full time it would be difficult to obtain financing unless you have a rather large portfolio or a great rapport with a banker.
I am no where near a full time investor but One day I hope to leave my Cubicle prison that I live in for 8 hour s a day! Can't stand the idea of working my whole life making someone else rich. :-D
I'm actually about 18 months away from quitting my corporate job, although I plan on having my own business (non-REI) in addition to my real estate investments.
I'm a buy and hold investor. So rental income is what I generally look at. My calculations have shown that I would need approximately 80 units to be able to retire into REI.
When looking to retire into REI, the guidelines I suggest are:
- Make sure that you're making at least as much from REI as you did from your day job.
- If you intend to continue investing after retiring into REI, then you'll need to be making at least 25% more than you did in your day job. Banks will discount rental income by 20-25%.
- Your best approach would probably be to avoid doing only one aspect of REI. Flips are great for large cash infusions, but they can also have very dry spells. Rental income is steady, but you don't get the big payoffs. Rehabs also provide large cash infusions, but they require time to develop. In other words, pick a couple directions that are opposite of each other. This way, when one is dry, the other one will feed you. And of course make sure your choices are in line with your local economy and demographics.
- After you leave your day job, expect the first year or two to be the most difficult. Many banks won't want to deal with you because you're no longer employed, and you haven't submitted a tax return under your "new business." Once you get past this period, if you've planned well, worked hard, and had a little bit of luck, you should be okay.
Alexlev,
Great advice. Most people who have not been self employed don't understand the two years that banks pretty much want to ignore you. If on the other hand, a newbie can keep their day job while doing REI for 2 years, then when they finally go full time, they have 2 years of schedule C or corporate income tax statements to satisfy the banks demans for history and not just being unemployed.
I also like your idea about try to keep your income streams coming from a couple of different areas.
Thanks for your thoughts.
Robert
[addsig]
Just as a follow up to this post, If I retire from my day job and apply for a commericial loan, with 20% down, would it matter if I am unemployed? I was the under the impression that for commercial loan, banks only look at the property and not your salary.
Thanks